Correlation Between Vector Acquisition and Future Health

Can any of the company-specific risk be diversified away by investing in both Vector Acquisition and Future Health at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vector Acquisition and Future Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vector Acquisition II and Future Health Esg, you can compare the effects of market volatilities on Vector Acquisition and Future Health and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vector Acquisition with a short position of Future Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vector Acquisition and Future Health.

Diversification Opportunities for Vector Acquisition and Future Health

0.21

Correlation Coefficient

Vector Acquisition  Future Health

Modest diversification

The 3 months correlation between Vector and Future is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vector Acquisition II and Future Health Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Health Esg and Vector Acquisition is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vector Acquisition II are associated (or correlated) with Future Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Health Esg has no effect on the direction of Vector Acquisition i.e., Vector Acquisition and Future Health go up and down completely randomly.

Pair Corralation between Vector Acquisition and Future Health

Given the investment horizon of 90 days Vector Acquisition II is expected to generate 0.46 times more return on investment than Future Health. However, Vector Acquisition II is 2.19 times less risky than Future Health. It trades about 0.08 of its potential returns per unit of risk. Future Health Esg is currently generating about -0.01 per unit of risk. If you would invest  1,006  in Vector Acquisition II on September 18, 2024 and sell it today you would earn a total of  59.00  from holding Vector Acquisition II or generate 5.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Vector Acquisition II  vs.  Future Health Esg

Vector Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vector Acquisition II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vector Acquisition is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Future Health Esg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Future Health Esg has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Future Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vector Acquisition and Future Health

The main advantage of trading using opposite Vector Acquisition and Future Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vector Acquisition position performs unexpectedly, Future Health can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Future Health will offset losses from the drop in Future Health's long position.

The idea behind Vector Acquisition II and Future Health Esg pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.